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Has government regulation gone too far?

The Consumer Financial Protection Bureau is in the process of defining a "qualified residential mortgage," which determines what makes a loan safe. It requires banks to retain 5% of the risk on non-QRM loans it securitizes before packaging and selling them to investors.

The risk retention requirements were called for in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rule is an attempt to correct market practices that led to the housing crisis: allowing people to buy more house than they could afford with no financial stake in whether they were able to repay their loans or not.

But critics are saying the regulation will do more harm than good, cutting perfectly capable borrowers out of the market or into higher cost loans.

"I want to be sure that our government fixes whatever broke the housing market," writes Michelle Singletary, a syndicated columnist who appears in The Buffalo News. "But if borrowers have to wait to save up a 20 percent down payment to qualify for the best mortgage deal, we will be putting home ownership out of the reach of a lot of people, particularly low- to middle-income borrowers."

She's not alone in believing the regulation could negatively affect low-income families and people of color

The Woodstock Institute, a non-profit research and policy organization, said the idea behind the so-called "QRM" is a good one, but that "unfortunately, regulators went overboard in defining [it]."

It sees other problems, too.

"Lenders may raise prices to compensate for having to retain some risk and it may crowd out smaller lenders who can't afford to retain risk, shrinking the mortgage credit market," writes the Woodstock Institute. "More importantly, a 20 percent down payment doesn’t significantly lower the default rate."